REG - dotDigital Group plc - Trading Update <Origin Href="QuoteRef">DOTD.L</Origin>

dotDigitalAnnouncement

06/09/2014 16:32

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RNS Number : 2867M
dotDigital Group plc
15 July 2014 
 
FOR IMMEDIATE RELEASE                                                         
                                                      15 JULY 2014 
 
dotDigital Group Plc 
 
("dotDigital, the "Company" or the "Group") 
 
TRADING UPDATE 
 
Year Ended 30 June 2014 
 
A year of further strong organic growth 
 
dotDigital Group Plc (AIM:DOTD), the leading provider of intuitive Software as
a Service ("SaaS") and managed services to digital marketing professionals,
provides a trading update for the year-ended 30 June 2014, ahead of its full
year results which are expected to be announced mid-October. 
 
The Board is extremely pleased with the Company's performance and now
anticipates that full year EBITDA will be slightly ahead of the current market
forecast of £4.3m. This performance is a result of continued strong organic
growth in the high margin and long-term recurring revenues generated by our
core email marketing product, dotMailer. 
 
Financial Highlights 
 
Within the core products division, revenues for the 12 month period grew by
32% compared to the same period in 2013, resulting in closing cash at the end
of the period of £9.3m (2013: £6.1m). 
 
A summary of revenues by division for the full year to 30 June 2014 is
provided below: 
 
 Revenue £m                      12m to 30.06.14  12m to 30.06.13  % Change  
 dotMailer Marketing Automation  £16.1m           £12.2m           32%       
 Discontinued *                  £0.3m            £1.6m            -81%      
 Total Group                     £16.4m           £13.8m           19%       
 
 
* In March 2013 the Board announced its plans to wind down the Group's Search
Marketing and Web Design Division, 'dotAgency', whilst continuing to service
its existing clients for the remaining duration of their agreements. These
agreements are now coming to an end culminating in the successful closure of
this division. 
 
dotMailer: Email Marketing and Marketing Automation Software - SaaS Products 
 
Revenue performance was driven by strong growth of 32% across the core high
margin email marketing SaaS side of the business, ahead of plan. 
 
This strong organic growth was underpinned by a combination of successful new
client wins, particularly in the corporate and mid-market sector, growth in
recurring revenue from existing clients and improved client retention through
having a larger proportion of clients under contracts of 12-36 months. Notable
client wins during the year included Land Securities Group, Thorntons,
Ladbrokes International, Children with Cancer and National Express Bus. 
 
Revenues from the US region performed strongly increasing from $456k to $1.4m,
an increase of over 200% compared to the same period in 2013. The New York
sales office continues to focus on sector niches and higher value corporate
clients that it has identified which are the most attractive for the dotMailer
product platform. A good illustration of this strategy is 'Wine Enthusiast',
the world's leading source for wine accessories, storage and gifts, being one
of the largest and most recent client wins to date. 
 
Penetration into Latin America has also materialised in the form of working
with Panama's COPA Airlines, the third largest carrier in South America,
demonstrating how the dotMailer platform is travelling from our US base into
Central America and beyond. The pipeline continues to grow with continued
prudent investment in headcount and marketing activities to capitalise on this
extremely exciting territory. 
 
The Email Creative and Managed Services offering (part of the wider dotMailer
Division) has had a very strong performance with an increase in revenue of
138% to £1.9m over the comparable period. We are confident that continued
revenue growth can be unlocked from these new services by generating return on
investment (ROI) for our clients and helping time poor marketeers to outsource
their creative and campaign management/strategy to email marketing experts
such as dotDigital. 
 
Magento Connector 
 
dotDigital fully launched the Magento connector earlier in the year allowing
ecommerce customers that use the Magento platform to synchronise their data
between the dotMailer and Magento platforms. The client take up of the new
Magento connector has been strong with the average monthly recurring revenue
spend for customers of over £700 per month. The product has been well received
as evidenced by feedback gained from both clients and Magento implementation
partners. Over 100 clients are now using this platform with most recent wins
including 7dayshop.com, Heals, Trunki and Fuji Film in the UK. 
 
The US Region has also demonstrated how invaluable the Magento relationship
has become over a short period of time with 14 new clients won since the
beginning of the year. Vizio, one of the largest consumer electronics
companies in the US and listed in the top ten biggest brands in the world
using Magento, is one of the most recent additions for dotDigital. New Magento
Partners in the US also include, Blue acorn, Pod1, Classy llama, SLI Systems,
Celebros and Peer1. 
 
A clear endorsement of the success of the Magento relationship  was recently
demonstrated when dotDigital was awarded 'Gold Partnership Status' by Magento,
only one in four email service providers in the world to have been granted
this prestigious award. Marketing efforts have also been continuous with
dotDigital sponsoring Magento's premier eCommerce 'Imagine 2014' event held in
Las Vegas earlier this year and this week's 'MagentoLive' event in London. 
 
Cash Generation 
 
The business continues to be highly cash generative with cash at the end of
the period standing at £9.3m, an increase of 52% on the prior year (2013:
£6.1m) after capital expenditure and product development of £1.9m. The Company
continues to be debt finance free. Highly efficient cash collection processes
combined with over 45% of clients paying retainers by direct debit,
contributed to the Company's strong balance sheet at the year end. 
 
dotMailer: Re-branding : 15th Anniversary Network Party and New Office
Opening 
 
dotDigital has successfully concluded a dotMailer re-branding initiative
whichincorporates a refresh of the dotMailer platform, release of powerful new
features and the launch of a new Marketing website. This platform and new
website has gone live today on www.dotmailer.com. 
 
dotDigital is also celebrating its 15 year anniversary and to commemorate this
auspicious landmark the Company is tonight hosting a "15th Birthday Network
Party" for clients, partners and institutional investors. This evening's event
is being held at dotDigital's new offices at 1 London Bridge. 
 
Strategy Update 
 
Our strategy of continued investment in the organic growth of the core email
marketing business is delivering pleasing results. 
 
The focus on fast growing medium sized businesses and corporate clients has
driven average monthly spend per client up by 35%. This combined with a focus
on longer term contracts, (87% of clients are now on 12-18 month contracts),
and client retention, is importantly leading to significantly higher client
lifetime values. 
 
Outlook 
 
The 'dotMailer' email marketing/marketing automation platform continues to
perform very strongly. 
 
The strategy to focus on larger clients with higher lifetime values and lower
attrition has demonstrably contributed to higher services revenues, higher
average monthly contract values and higher retention. 
 
The marketing initiatives to build our US presence are now starting to deliver
a strong pipeline of new clients particularly in the mid-size online retail
space which is a core focus for 2014/15. 
 
As part of the rebranding initiative some significant new big data/marketing
automation features have been added to the dotMailer platform which the Board
believes will open up new sales opportunities and provide enhanced revenue
opportunities from existing clients. 
 
Demand for email marketing and marketing automation continues to be strong
both in the UK and internationally and the Board believes that the dotMailer
platform is well placed to continue to generate strong organic growth in
revenues over the coming year. 
 
Commenting on the trading update, dotDigital's Chief Executive Officer, Peter
Simmonds said:  "This strong performance is again extremely encouraging and
illustrates that our organic growth strategy is working. We look forward to
providing a full update on the year's trading together with greater detail on
our future growth plans when we announce our full year results in October. I
would like to take the opportunity to thank our staff for their tremendous
enthusiasm, commitment and performance over the past year and our shareholders
for their continued support." 
 
For further enquiries please contact: 
 
 dotDigital Group PlcPeter Simmonds, CEOMilan Patel, CFO                              Tel: 020 8662 2777  
 Financial PR and Investor RelationsLisa Baderoonlisa.baderoon@dotdigitalgroup.co.uk  Tel: 07721 413 496  
 N+1 SingerShaun Dobson, Head of Corporate FinanceNick Donovan, Corporate Finance     Tel: 020 7496 3000  
 finnCapStuart Andrews, Corporate Finance                                             Tel: 020 7220 0500  
 
 
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